Treasury Wine Estates Ltd said Monday it would redirect some wine intended for China and cut costs after Beijing imposed anti-dumping tariffs on Australian wine, dealing a significant blow to the world's largest listed winemaker.
The company said it would relocate its Penfolds Bin and Icon luxury range of wines from China to other markets such as Australia, the United States and Europe. It added that future vintage intakes from 2021 would also be reduced.
Over the weekend, China imposed temporary anti-dumping tariffs of 107.1% to 212.1% on wine imported from Australia, with Treasury Wine facing a rate of 169.3%, the highest of any of the named wine companies.
Nearly a third of Treasury Wine's earnings in fiscal 2020 came from China, where it enjoys strong demand for its higher-margin luxury wine. It said demand in China would be extremely limited because of the tariffs.
"We are extremely disappointed to find our business, our partners' businesses and the Australian wine industry in this position," Tim Ford, chief executive officer, said.
China began an anti-dumping probe in August of Australian wine imports as relations between Beijing and Canberra deteriorated. China accounts for near 40% of Australian wine exports.
"There is no doubt this (tariffs) will have a significant impact on many across the industry, costing jobs and hurting regional communities and economies, which are the lifeblood of the wine sector," Ford added.
The tariffs are yet another blow to Treasury Wine this year, as global curbs on travel and social gatherings have hit sales hard, especially at its non-retail channels that include bars and restaurants.